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News & Views | Business Process Analysis

News & Views is published monthly by 180 Systems. Our objective is to provide recent articles to our readers on business technology topics. In some cases, our blog contains a title with a hyperlink to a source article, a quote from the article and our comments. In other cases, we have provided a blog without a hyperlink for original content by 180 Systems. We encourage you to post your own comments. You can also access our blog by topic.

What come first – an ERP system (the chicken) or lean management (the egg)?

Lean management is all about eliminating any waste by identifying each step in a business process and then revising or cutting out non-value added steps. The question is whether this should be done prior to selecting an ERP system. Proponents of doing it first assume that the implementation of an ERP system would be merely improving the automation of the existing process and better to eliminate the waste first. However, this approach (sometimes called repaving the cow paths and extending the chicken and egg analogy) is not best practice. The implementation of an ERP system is the best opportunity to implement lean processes. As well, eliminating waste can often be done efficiently with technology so why design and implement a business process that could potentially be part of an existing ERP system? ERP systems have also evolved and do incorporate lean techniques. But ERP implementers don’t always know enough about Lean to optimize business process. You need to either make sure the implementer can implement Lean methods or find yourself a Lean consultant to help with the implementation. One of our clients recently turned to Focused Improvement Consulting to make sure that lean management is applied to the implementation process.

December 16, 2014 from IndustryWeek – “I sometimes find it difficult to describe what I do to friends and acquaintances who have careers outside of manufacturing and rarely give much thought to how things actually get made. To the uninitiated, if I were to say “I help manufacturers to implement continuous improvement (CI) models” or “I support companies in their production system journey,” I might as well be speaking a foreign language because, while these statements resonate with those of us who live and breathe CI every day, they don’t mean much to the rest of the world…”

180 View – We start all our projects with a kick-off meeting and there are other similarities to the NFL analogy. The article discusses the importance of “What does the business require of this operation to be successful” which we call the Critical Success Factors. We use it to identify functional requirements that will enable attainment of CSFs and also to identify the important metrics or KPIs. The article also discusses comparing metrics to the perfect or ideal standard. This is what we call the goal KPI and how we recommend determining whether a particular investment was worthwhile.

A business process review is essential to any potential business process improvement or system selection project. But there is a huge variance in what is included in these reviews by the organizations that conduct them. A business process review has the following benefits:

Requirements are exposed based on the as-is business process and requirements to overcome the problems

The impact of the problems are useful in making a business case

The documentation will be useful to potential vendors who should be able to reduce the billable scoping work that they normally complete

The problems identified in the business process review should be considered opportunities for business process improvement and will help ensure that these problems are resolved

October 24, 2013 from Entrepreneur – “…Lean has proven a difficult process to master — not a quick fix, but a long, complex business-culture-changing journey. The Lean movement has also suffered from a number of “misconceptions…”

180 View – The article describes 4 misconceptions. Lean is not a cost cutting exercise (#1) or just about production (#2) and can’t be accomplished without input from other departments in a company (#3) or without input from business partners (#4).

August 19, 2013 from ProjectManagament.com– “To be horribly, brutally frank, organizations don’t do a great job today about getting everyone to discuss—together–what a project would collectively mean. Instead, requirements typically get drafted by one person or a small core team who–in relative isolation–decide what will be good for everyone else. And while this looks awfully efficient on the front end, because it bypasses all those long, drawn-out, awkward and challenging meetings and debates, it gets awfully expensive on the back end…”

180 View – Defining requirements is not easy. We wrote an article about this that was published in 2010 but is still valid today. Click here for our take on Requirements Analysis.

February 6, 2012 from BusinessFinance– “Finance, like other key corporate functions, is under pressure to reduce operational costs while increasing the business value it generates for the larger enterprise. To do so, executives need reliable information that can help them understand whether they are accomplishing their objectives and how their performance stacks up against their peers. Such information can be acquired with benchmarking.

What’s surprising is that fewer than a third of finance organizations, according to Accenture’s own data, use benchmarking. That may be why, as reported in the Accenture report, “The Changing Role of the Finance Organization in a Multi-Polar World,” that only 29 percent of 350 survey respondents said they have a good understanding of where their organization stands in relation to finance functions in comparable enterprises…”

180 View – We agree with the importance of benchmarking but it’s not easy. It’s not easy to figure out which metrics, or to gather the data or find external benchmark data for comparison purposes. We have developed a benchmark tool at http://www.180benchmarks.com/ that will help. Check it out and let us know what you think.

October 14, 2012 from The Enterprise System Spectator and written by Frank Scavo – “When it comes to ERP, most business leaders realize that it is critical to select the right system and implement it successfully. Likewise, when it comes to advice about ERP, most analysts and consultants focus on their attention on best practices for ERP vendor selection and implementation.

But very few analysts pay attention to what happens after the implementation. An organization will spend many more months using an ERP system than it will selecting and implementing it. A company might take three to six months to select a new ERP system and another year or two to implement it: but it will be using that system to support its business operations for seven years, 10 years, or hopefully even longer…”

180 View – I have often included articles from Frank Scavo as I appreciate his insight especially when his insight dovetails with our methodology. When we conduct our business process reviews, our documentation includes the processes, problems, cause of the problem (System, Training, Business Process, and Infrastructure) and the impact of the problem. Often the problem is not the system and even if it is the system, there may be a good workaround.

October 1, 2012 from BusinessFinance – “…Organizations begin with the best of intentions by creating new performance metrics to measure and assess impact. However, unintended complications almost always arise: data collection consumes the reporting process, leaving little time for forward-looking analysis; reports are created to meet the needs of the moment and persist despite few internal consumers; KPIs become buried among the host of “key” performance indicators and bevy of reports; and personnel at all levels struggle to interpret how performance measures relate to their business functions and, more important, to the company’s bottom line. …”

180 View – The article makes good recommendations for improving KPI’s. For example they suggest “KPIs should focus on the core of the business and overall business strategy, as well as what propels the value of the business long term.” We start all our projects asking our clients what are their Critical Success Factors and what metrics (KPI’s) are used to measure them.

April 19, 2012 from BusinessFinance – “According to research conducted in March 2012 by APQC in partnership with IEG, 81 percent of large corporations are currently investing in at least one major program to improve financial management processes….”

180 View – This is another good sign that the economy is improving, which is good for everyone. The article discusses a number of finance initiatives and there is a link to the full copy of the APQC research report, which had more interesting information including techniques to improve A/P processing:

April 18, 2012 from IndustryWeek – “For many large and midsize manufacturers, the challenge of enabling the corporate-wide enterprise resource planning (ERP) system to mesh with their lean initiatives on the plant floor requires a delicate balance…”

180 View – This article will strike a chord for manufacturers that struggle to fully automate production scheduling using lean manufacturing techniques and at the same using ERP which attempts to reduce setup times and create longer production runs. But if a production planner can do it with excel, there’s no reason ERP should not be able to build similar rules. At the very least, the ERP system should allow a drag and drop approach to changing the schedule as well as allowing the scheduler to see the impact of the change.